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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Nov 22, 2023
Livello Capital operates a distressed credit strategy focused on complex restructuring situations and idiosyncratic risks. In October 2023, the fund positioned for what they view as late cycle market conditions, with Treasury yields reaching 5% and credit spreads widening significantly. Default activity reached a three-year high, with year-to-date defaults of $75.6bn ranking as the fourth largest annual total on record. The fund is actively invested in distressed names like Rite Aid and WeWork, seeking opportunities where bankruptcy processes can improve profitability through lease rejections and restructuring tools. Key risks include the inverted yield curve signaling recession in early 2024, geopolitical tensions, and deteriorating credit quality with loan recoveries underperforming historical averages. The team is reducing gross and net exposures while focusing on names less sensitive to economic cycles. They are exploring themes including commercial real estate opportunities and regional bank impacts, positioning for what they believe could be significant value creation in distressed situations.
Focus on distressed credit opportunities and complex restructuring situations in a late cycle environment where defaults are increasing and traditional credit metrics are deteriorating.
The fund expects a recession in the first or second quarter of next year based on yield curve inversion signals. They are encouraged by the uptick in defaults and continue to seek uncorrelated idiosyncratic risks in complex situations. The team believes this is arguably the best their strategy has ever looked.
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